IR boss faces sack over tax

THE chairman of the Inland Revenue could face the sack after failing to tell Government Ministers that his department had done a multi-million-pound deal with a 'tax avoiding' offshore company.

Sir Nicholas Montagu did not tell his boss, Paymaster General Dawn Primarolo, about the deal in which £220 million worth of Inland Revenue properties were sold to a private company based in the tax haven of Bermuda. He has admitted to his 'cock-up' and now there is a question mark over his future, with a House of Commons inquiry report next week expected to highlight management failures.

The contract to sell the Revenue's entire 600-property portfolio will cost millions in lost duty and was signed despite a Treasury crackdown on tax dodges in offshore islands.

Adding to the furore is the fact that the company, Mapeley Steps, based in Bermuda, is owned by billionaire speculator George Soros, who famously made £1 billion betting against the collapsing pound on Black Wednesday in 1992.

Because Mapeley is offshore and Soros does not live here, they will not have to pay capital gains tax on any disposals of the assets in the UK.

Asked in December why he failed to tell Dawn Primarolo about the deal, Sir Nicholas, 59, said: 'It was a pure and simple oversight. I have apologised to the Paymaster General for this. Did I give my Minister the service she was entitled to expect? No, I did not.'

He also appeared to admit that communications within the Revenue had broken down, saying he had not been fully informed of the details of the deal himself and that Press releases stating the contract was with a British firm were wrong.

The Chancellor, Gordon Brown, is under pressure to explain how Britain's main tax-raising agency came to sign the deal, given the Government's belief that havens shield companies and wealthy individuals from British taxes.

The Mail on Sunday has learned that the Treasury select committee's report will be highly critical of the Revenue's senior managers, particularly Sir Nicholas, a former philosophy lecturer.

A Whitehall source said: 'There is a feeling that what is needed is someone with more experience of the modern business environment.'